CORRECTION, 5/29/13, 6:55 p.m. EDT: The names of Osler partner Peter Glossop and associate Amanda Heale were misspelled in the original version of this article. The names have been corrected in the tenth paragraph. We regret the error.

After months of eyeing possible acquisition targets, Canada’s Valeant Pharmaceuticals International decided to narrow its sights on Bausch & Lomb.

Laval, Quebec–based Valeant said Monday that it has agreed to acquire the contact lens maker in a cash deal worth $8.7 billion. The transaction’s terms call for Valeant to pay $4.5 billion to a group of Bausch & Lomb investors led by private equity firm Warburg Pincus, with the remaining $4.2 billion earmarked to pay off the target’s debt.

The announcement came a week after Actavis—which saw a potential deal under which it was to be acquired by Valeant for $13 billion collapse in April—said it had agreed to purchase Irish rival Warner Chilcott for $8.5 billion, according to The Am Law Daily’s previous reports. The two transactions have contributed to an increase in deal volume in the health care sector, which is up 14 percent so far this year compared to the same period a year ago, according to The New York Times.

By acquiring Rochester, New York–based Bausch & Lomb—which is known mainly for its contact lenses and related products, but also produces surgical devices and pharmaceutical products for the eye health industry—Valeant is significantly expanding its existing portfolio of ophthalmological offerings.

Warburg Pincus, which led an investor group that paid $4.5 billion for Bausch & Lomb in a 2007 leveraged buyout, is expected to nearly triple its original investment, according to the Times. Bausch & Lomb filed for an initial public offering in March, but Warburg Pincus opted instead for an immediate exit of its investment in a deal The Wall Street Journal says is fueled, in part, by the relative ease with which Valeant will be able to refinance the target’s debt at a low rate.

Valeant said it would raise as much as $2 billion in new equity to cover the cost of the transaction, with the rest of the financing coming in the form of new debt.

Bausch & Lomb is predicting roughly $3.3 billion in revenues this year and Valeant expects to see at least $800 million in annual cost savings as a result of the deal, which is expected to close in the third quarter, pending regulatory approval.

For legal advice on the purchase, Valeant has turned to attorneys at Skadden, Arps, Slate, Meagher & Flom while Osler, Hoskin & Harcourt is serving as the company’s Canadian counsel. Skadden frequently represents Valeant in connection with major transactions. In September, for instance, Skadden and Sullivan & Cromwell advised Valeant on its $2.6 billion purchase of skin care company Medicis Pharmaceutical Corporation. Skadden also advised Valeant on its $3.2 billion merger with Biovail Corporation in 2010; S&C represented a special committee of Biovail’s board in that matter.)

Skadden is led this time by New York–based M&A partners Stephen Arcano, Marie Gibson, and Jeffrey Brill. Banking partner Robert Copen, corporate finance partner Richard Aftanas, antitrust partner Steven Sunshine, tax partner David Rievman, executive compensation and benefits partner Erica Schohn, IP partner Matthew Zisk, and banking counsel Alexandra Margolis are also advising. The Skadden associates working on the deal are Christopher Barlow, Reuben Kobulnik, and Mark Pezold.

Osler’s team includes firm chair and corporate partner Clay Horner, as well as corporate partner Douglas Bryce, tax partner Firoz Ahmed, and competition partner Peter Glossop. The Osler associates on the deal team are Amanda Heale and Robert Hughes.

Former Gibson, Dunn & Crutcher attorney Robert Chai-Onn serves as Valeant’s general counsel.

For its part, Bausch & Lomb has turned to a Cleary Gottlieb Steen & Hamilton team that includes corporate partners Robert Davis and David Leinwand in New York. Finance partner Margaret "Meme" Peponis and employee benefits partner Michael Albano are also advising, along with associate James Langston.

In March, Cleary helped Bausch & Lomb secure a $772 million dividend payment for its investors and also advised Warburg Pincus in connection with the 2007 purchase of the company.

Stikeman Elliott is serving as Canadian counsel to Bausch & Lomb with a team led by corporate partners John Leopold and Benoit Dubord, as well as tax partner Marie-Andrée Beaudry and regulatory partner Jeffrey Brown.

Bausch & Lomb’s general counsel is A. Robert Bailey, a former Nixon Peabody associate.